Judge allows Astros to seek new TV partner

A federal bankruptcy judge Tuesday authorized the Astros to negotiate with third parties on a new business plan for Houston Regional Sports Network, the troubled Astros-Rockets-Comcast partnership that owns Comcast SportsNet Houston.

Judge Marvin Isgur signed what he described as “a pretty extraordinary” three-page order that was accepted in a rare show of unanimity among the fractious network partners.

It names the Astros as lead negotiator with authority to “investigate and negotiate the terms of carriage agreements, broadcast agreements, management agreements, lease agreements, equipment agreements, purchase and sale agreements and debt and equity investments and other matters pertaining to the formulation of a business plan.”

Judge Isgur’s order, signed 24 hours before the Rockets’ regular-season opener on CSN Houston, has no apparent immediate effect on efforts to line up carriage agreements with DirecTV, Suddenlink or AT&T U-verse.

In search of a ‘fair deal’

However, it frees Astros owner Jim Crane, who has been critical of the network’s financial performance, to negotiate with parties such as Fox and DirecTV across a wide range of services and scenarios that could impact the future of the Astros and Rockets on TV.

“We’re very excited about trying to get something done here for the Astros, the Rockets, the fans and the city,” Crane said. “We think there is demand. … We’re not looking for the best deal in the universe, just a fair deal that is good for the teams.”

Crane said he will consult “with all the players — Fox, DirecTV, AT&T, Time Warner. I will work to try to get something favorable so that we can move on with or without Comcast in the deal.”

Any agreements into which the Astros enter on the network’s behalf, such as carriage deals or the sale of a portion of the partnership to a third party, are subject to the court’s approval.

Judge Isgur’s order places on hold the Astros’ motion to dismiss the involuntary Chapter 11 bankruptcy case filed Sept. 27 by four Comcast affiliates and Comcast’s motion to name an interim trustee.

He ordered the Astros to hold weekly conference calls with Comcast and the Rockets and set a Nov. 13 status hearing. The order remains in place until another hearing on Dec. 12.

The agreement was hammered together during several closed-door court sessions and conferences in federal courthouse meeting rooms involving the two dozen or so attorneys taking part in the two-day hearing.

“I don’t know that I could do this without the consent (of the feuding parties),” Judge Isgur said. Attorneys for all three partners agreed, and Rockets attorney Alan Gover thanked Isgur for “the court’s activism.”

One key element of the order absolves from liability any third party “that undertakes negotiations or investigations at the Astros’ request.” The Astros are absolved of liability in similar fashion.

Current carriage stays

It also leaves in place the network’s carriage agreement with Comcast, the largest cable carrier in Houston, which will be a critical asset to bidders.

Isgur’s order was prompted by Crane’s complaints that Comcast/NBC Sports Group has not given the Astros a business plan that allows the network to be profitable.

Comcast witnesses countered that Crane blocked a proposed carriage agreement with DirecTV this spring that they said would have a “cascading” effect in lining up other carriers. Internal reports, however, said that even with DirecTV on board, CSN Houston would require several years to become profitable.

The Astros own 46 percent of Houston Regional Sports Network, compared to 32 percent for the Rockets and 22 percent for Comcast, which provided a $100 million loan to launch the network Oct. 1, 2012. Comcast, in documents filed with the court, said it was interested in buying the entire network if it becomes available and is committed to staying in business in Houston.